Shares in fantasy video games developer and publisher Frontier Developments (FDEV:AIM) sank 10% to £27.43 after an underwhelming trading statement which fell short of market expectations.
For the year ended 31 May the company said provisional unaudited revenues were £91 million, slightly shy of the consensus analyst forecast of £93 million.
The board indicated it expected 2022 revenues in the range of £130 million-to-£150 million, which is disappointing given that the consensus is already at £146 million according to Refinitv data.
For 2023 the company is projecting revenues to be between £160 million and £180 million based on the performance of current and future game franchises, together with a growing contribution from the firm’s third-party publishing arm, Frontier Foundry.
DEVEOPMENT CHALLENGES
While Frontier benefitted from an increase in gaming during lockdown, the company has suffered some development challenges related to collaboration on large projects.
One casualty is its F1 game which will now be released in early 2023 financial year, after 1 June 2022 as opposed to late fiscal year 2022.
In addition, there have been teething problems with the game of Elite Dangerous Odyssey which released on PC on 19 May. Despite the company addressing the issues with new updates there had been some frustration from users.
Investment director at AJ Bell, Russ Mould commented, ‘Elite Dangerous: Odyssey, came out in late May and the reviews have been brutal to say the least.
‘Users say it is another Cyberpunk disaster with poor user interface, significant bugs and the game constantly crashing. Frontier has already pushed through two rounds of updates, but significant reputational damage might have already been done.’
Analysts at Shore Capital said: ‘Given some development challenges remain, along with a disappointing title launch and further delays, we express some caution.’
Frontier also announced that it would be launching Jurassic World Evolution 2 will in late 2021 on PC, PlayStation 5, Xbox Series X|S, PlayStation 4 and Xbox One.
